The "R" Word

UK39xsVOur calendar says it’s 2014, but Venezuela seems to be stuck in the XXth Century: we are dealing with the return of malaria, and shortages. Yes… the country with the largest proven oil reserves in the world is -ironically- filled with empty supermarket and pharmacy shelves. Needless to say, Venezuela is in a recession. Again. And now, a gizmo-laden new biometric rationing system.

The Fair Prices Superintendent, Andrés Eloy Méndez, claimed that the biometric system would “allow families to purchase a sufficient amount every week”. So… if “sufficient” means a “fixed amount” or at least a maximum amount, then he’s clearly talking about rationing… Right?

In a classic case of using words to mean the opposite of what they mean, Maduro lamely tried to reassure us that “the system will not ration anything”. BS. The biometric system limits how much of a given thing you can buy in a given period of time: that’s more or less the dictionary definition of rationing. “To ration” is to “allow each person to have only a fixed amount of (a commodity)”. What Bolivarian Socialism has wrought is just a 21st century version rationing card, much like the one used in Cuba since 1963 only, y’know, electronic.

It’s not the first we hear of this. Back on March 8th, 2014, Maduro announced the “Tarjeta de Abastecimiento Seguro”, which would complement a biometric system to control sales and –according to Maduro- prevent smuggling and speculation.

Though the biometric system was originally supposed be implemented on government-owned and subsidized supermarkets like Pdval, Mercal and Abastos Bicentenario, the Central Government recently announced that the biometric system would be expanded to private supermarkets.

Not only is this system unconstitutional (just like our friend @ignandez clearly explains in Spanish in Prodavinci), it’s also falsely presented as the solution for the shortages that we Venezuelans face on a daily basis.

Rationing is a clear sign of the decay of the so-called “Socialismo del Siglo XXI”, just like it was of the Classic Socialist System of the XX Century. But, has one would often hear, those who don’t know history are doomed to repeat it.

According to János Kornai (the Hungarian economist, reknown for his studies on Socialism), the economic characteristics of the Classic Socialist System of the XXth Century are:

If in block 1 we change “Marxist-Leninist” for “Psuv”, the graph also represents the economic basics of the “Socialismo del Siglo XXI”. No surprise there.

What’s really shocking is that the Venezuelan Government would expect different results… they expect block 5 to simply vanish or something.

By 1977, 32% of the world population lived under a Classic Socialist System. But after its epic fail, by spring 1991 only 0.006% of the world population still lived under this system. (Kornai, 1992)

Why would anyone would want to live under an economic system that would clearly bring them a life of complications and misery? There are 3 basic theories: some say is all about power. Others say is all about “los guisos”. But there are also crazy ones that believe in the system and are simply in denial.

Just like we didn’t come up with the Socialist System, Venezuela is not the first country to “suffer” rationing. Kornai (1992) shows us this rather depressing set of examples:

Also… those LONG lines to buy products are nothing new when it comes to countries that lived under the Classic Socialist System.

Siberians line up outside a shop in Novokuznetsk, Russia, in the final years of communist rule

For some years, Venezuelans have had to buy products with restrictions. With the biometric system the rationing is simply being formalized.

But rationing is not going to solve the shortages.

To reduce the shortage (and inflation), is essential to foster domestic production and to –in the short and medium run- increase the efficiency of imports. The Central Government should not focus on how to track sales, but how to encourage the increase of the supply and quality of goods and services.

Since the first step towards recovery is admitting you have a problem, this might take a while… in the meantime, nos vemos en la cola.